Bank of NY v Dell-Webster

[*1] Bank of NY v Dell-Webster 2008 NY Slip Op 52678(U) [23 Misc 3d 1107(A)] Decided on October 20, 2008 Supreme Court, Bronx County Billings, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on October 20, 2008
Supreme Court, Bronx County

Bank of New York, as Trustee for the Holders of the GE-WMC Asset-Backed Pass-Through Certificates, Series 2006-1, Plaintiff

against

Barbara N. Dell-Webster, Edward Dell, Household Finance Realty Corp. Of New York, Milton Rainford, New York City Environmental Control Board, New York City Transit Adjudication Bureau, Defendants



380558/2007



For Plaintiff

Evan Wiederkehr Esq.

DelBello Donnellan Weingarten Wise & Wiederkehr, LLP

1 North Lexington Avenue, White Plains, NY 10601

For Defendant Rainford

William J. Apuzzo Esq.

Apuzzo & Chase

800 3rd Avenue, New York, NY 10022

Lucy Billings, J.

I.BACKGROUND

Plaintiff's action seeks foreclosure of a mortgage executed by defendants Dell and his daughter Dell-Webster, for $450,000.00, dated May 8, 2006, but not recorded in the Office of the City Register, Bronx County, until August 23, 2007. Plaintiff, claiming to be the mortgagee, moves for summary judgment dismissing the counterclaim by defendant Rainford, a creditor of co-defendant mortgagor Dell. C.P.L.R. § 3212(b) and (e). Rainford's counterclaim alleges that Dell's conveyance of the mortgaged property was fraudulent. For the reasons explained below, the court denies plaintiff's motion.

More specifically, Rainford's counterclaim alleges that in November 2005, Rainford commenced an action in this court to recover for Dell's default on a promissory note. In that action, as plaintiff concedes, Rainford obtained a judgment against Dell for $175,035.00, entered November 27, 2006, and still unsatisfied. By a deed dated May 5, 2006, Dell conveyed the mortgaged property, 1050 Grant Avenue, in Bronx County, to co-defendant Dell-Webster and himself. Regarding the fraud involved, the counterclaim alleges simply that: "This conveyance was in defraud of the creditor, RAINFORD." Aff. of Evan Wiederkehr, Ex. B ¶ 15.

II.FACTUAL RECORD [*2]

Rainford does not dispute the events leading up to May 2006, although plaintiff fails to establish these facts through any admissible evidence, such as certified public documents or affidavits on personal knowledge. E.g., People v. Mertz, 68 NY2d 136, 147-48 (1986); Holliday v. Hudson Armored Car & Courier Serv., 301 AD2d 392, 396 (1st Dep't 2003); Perez v. Brux Cab Corp., 251 AD2d 157, 159 (1st Dep't 1999); People v. James, 4 AD3d 774, 775 (4th Dep't 2004). See Zuluaga v. P.P.C. Constr., LLC, 45 AD3d 479, 480 (1st Dep't 2007); Vento v. City of New York, 25 AD3d 329, 330 (1st Dep't 2006); People v. Lewis, 284 AD2d 172, 173 (1st Dep't 2001); Kane v. Triborough Bridge & Tunnel Auth., 8 AD3d 239, 241 (2d Dep't 2004). In sum, Dell was the sole owner of the property and executed a mortgage on the property to Option One Mortgage Corporation for $340,000.00 dated August 25, 2005, and recorded in the Office of the City Register, Bronx County, October 11, 2005. Option One Mortgage then satisfied the prior mortgage on the property.

Nor does plaintiff establish the ensuing events through admissible evidence. C.P.L.R. § 3212(b); JMD Holding Corp. v. Congress Fin. Corp., 4 NY3d 373, 384 (2005); Forrest v. Jewish Guild for the Blind, 3 NY3d 295, 315 (2004); Giuffrida v. Citibank Corp., 100 NY2d 72, 81 (2003). Although plaintiff's attorney claims that documents attached to his affirmation are "copies of the real property records maintained by the City Register," "available through the internet," which a City officer or employee might well attest, plaintiff's attorney is unqualified to do so. Aff. in Reply of Evan Wiederkehr ¶ 3. See C.P.L.R. §§ 4518(c), 4520, 4540(a) and (b); People v. Brown, 221 AD2d 270, 271 (1st Dep't 1995); People v. Smith, 258 AD2d 245, 249-50 (4th Dep't 1999); People v. Hudson, 237 AD2d 943, 944 (4th Dep't 1997). Relying on inadmissible documents, however, plaintiff claims that on May 5, 2006, Dell conveyed the 1050 Grant Avenue property to his daughter Dell-Webster and himself. On May 8, 2006, Dell and Dell-Webster executed a mortgage to Mortgage Electronic Registration Systems, Inc. (MERS), for $450,000.00. Both the deed dated May 5, 2006, and the mortgage dated May 8, 2006, were recorded August 23, 2007.

Nowhere does plaintiff establish its relationship to MERS or how plaintiff became the holder of the mortgage. If plaintiff claims it is the assignee of the mortgage, for example, with the rights, claims, and defenses that the assignor had, Matter of International Ribbon Mills, 36 NY2d 121, 126 (1975); Trisingh Enters. v. Kessler, 249 AD2d 45, 46 (1st Dep't 1998); Federal Fin. Co. v. Levine, 248 AD2d 25, 28 (2d Dep't 1998), to establish that fact through admissible evidence, plaintiff must present the assignment of the mortgage to plaintiff in admissible form. C.P.L.R. § 3212(b); Rukaj v. Roth, 237 AD2d 503 (2d Dep't 1997); Columbus Natl. Leasing Corp. v. Perkin-Elmer Corp., 177 AD2d 1035, 1036 (4th Dep't 1991); Shaw, Licitra, Eisenberg, Esernio & Schwartz v. Friedman, 170 AD2d 1048, 1049 (4th Dep't 1991); BKS Assocs. v. Kenny, 151 AD2d 535, 536 (2d Dep't 1989). See, e.g., Colbourn v. ISS Intl. Serv. Sys., 304 AD2d 369, 370 (1st Dep't 2003). As an assignment is a contract, ineffective without a signature, it must be attested to. Acevedo v. Audubon Mgt., 280 AD2d 91, 95 (1st Dep't 2001); Fields v. S & W Realty Assoc., 301 AD2d 625 (2d Dep't 2003). Yet plaintiff presents no executed assignment, let alone any authentication of such a contract.

III.DISMISSAL OF RAINFORD'S COUNTERCLAIM FOR A FRAUDULENT CONVEYANCE

As a basis for summary judgment dismissing Rainford's counterclaim for a fraudulent conveyance, plaintiff nonetheless claims that Rainford does not adequately plead the counterclaim under C.P.L.R. § 3016(b), which requires that claims based on fraud state "in detail" "the circumstances constituting the wrong." A claim pursuant to New York Debtor and Creditor Law (DCL) § 273-a, however, does not require pleading or proof that the debtor Dell actually intended to defraud the creditor Rainford. Atsco Ltd. v. Swanson, 29 AD3d 465 (1st Dep't 2006); Fischer v. Sadov Realty Corp., 34 AD3d 632, 633 (2d Dep't 2006); Murin v. Estate of Schwalen, 31 AD3d 1031, 1035-36 (3d Dep't 2006); Petersen v. Valenzano, 285 AD2d 635, 636 (2d Dep't 2001). A claim pursuant to DCL § 273-a requires pleading and proof only that (1) [*3]Rainford already had sued Dell when Dell transferred the property; (2) the transfer was without fair consideration; and (3) Dell has failed to pay the judgment in Rainford's favor. Constitution Realty v. Oltarsh, 309 AD2d 714, 715 (1st Dep't 2003); Fischer v. Sadov Realty Corp., 34 AD3d at 633; Murin v. Estate of Schwalen, 31 AD3d at 1035-36; Mega Personal Lines, Inc. v. Halton, 9 AD3d 553, 555 (3d Dep't 2004). While Rainford's counterclaim need not allege an intent to defraud and does allege the first and third elements above, Rainford's answer does not mention the value of the property Dell conveyed to his daughter or how her consideration was less than that value.

Plaintiff, however, does not move to dismiss Rainford's counterclaim, C.P.L.R. § 3211(a), but moves for summary judgment. C.P.L.R. § 3212(b). When plaintiff moves for summary judgment, even assuming plaintiff has met its burden to establish a defense to Rainford's counterclaim through admissible evidence, the court may look beyond Rainford's answer and deny summary judgment if the record reveals evidence of facts that, while inadequately pleaded, constitute a meritorious counterclaim. Nassau Trust Co. v. Montrose Concrete Prods. Corp., 56 NY2d 175, 182-83 (1982); Alvord & Smith v. Muller Constr. Co., 46 NY2d 276, 279-80 (1978); EBC Amro Asset Mgt. v. Kaiser, 256 AD2d 161, 162 (1st Dep't 1998); Comsewogue Union Free School Dist. v. Allied-Trent Roofing Sys., Inc., 15 AD3d 523, 524 (2d Dep't 2005). See Cron v. Hargro Fabrics, 91 NY2d 362, 366 (1998); Leon v. Martinez, 84 NY2d 83, 88 (1994); Gomez v. Singh, 309 AD2d 620 (1st Dep't 2003); L. Magarian & Co. v. Timberland Co., 245 AD2d 69 (1st Dep't 1997).

As to the core disputed issue, plaintiff maintains that, in exchange for the joint interest in 1050 Grant Avenue that Dell conveyed to Dell-Webster May 5, 2006, she undertook with Dell a joint obligation to the mortgagee in executing the note and mortgage May 8, 2006. Accepting plaintiff's figures, the mortgage proceeds were used to repay Dell's $351,457.66 debt on the prior note and mortgage, plus $39,059.02 in settlement charges and $1,325.00 in disbursements, totalling $391,841.68, and leaving $58,158.32 to the joint owners. Murin v. Estate of Schwalen, 31 AD3d at 1034-35. Plaintiff does not allege the value of property conveyed, but since the mortgage three days later was for $450,000.00, presumably the value was at least that amount. Valuing Dell-Webster's joint interest at one half, Dell-Webster acquired at least $225,000.00 in the property value, even though she held a right of survivorship and was likely to survive her father, and $29,079.16 in loan proceeds, a total of at least $254,079.16, and then undertook a joint obligation similarly valued at $225,000.00. Thus, at minimum, Dell-Webster reaped $29,079.16 more than she undertook in debt. See Petersen v. Valenzano, 285 AD2d at 636; North Fork Bank v. Schmidt, 265 AD2d 466, 467 (2d Dep't 1999).

Because none of plaintiff's evidence is in admissible form, however, plaintiff fails to establish the value not only of the property conveyed, but also of Dell-Webster's consideration, to demonstrate that it was fair. Murin v. Estate of Schwalen, 31 AD3d at 1035-36. Rainford, on the other hand, in opposing plaintiff's summary judgment motion, may rely on the inadmissible evidence plaintiff has offered. E.g., Thompson v. Abbasi, 15 AD3d 95, 97 (1st Dep't 2005); Brown v. Achy, 9 AD3d 30, 32 (1st Dep't 2004); Toledo v. A.P.O.W. Auto Repair/Towing, 307 AD2d 233, 234 (1st Dep't 2003). Thus, even if Rainford has not pleaded the value of the property Dell conveyed to Dell-Webster or how her consideration was less than that value, in opposing summary judgment Rainford may rely on plaintiff's inadmissible allegations and documents that yield at least a $29,079.16 shortfall to Dell, which he otherwise could have applied to Rainford's judgment.

Moreover, to show that Dell's conveyance was for fair consideration and defeat Rainford's claim under DCL § 273-a, plaintiff must show that, in exchange for the property interest, "as a fair equivalent therefor, and in good faith, property is conveyed or an antecedent debt is satisfied." DCL § 272 (emphasis added); Mega Personal Lines, Inc. v. Halton, 9 AD3d at 555. The good faith of both the transferor and the transferee "is an indispensable component of fair consideration" under DCL § 273-a. Id. Even if Dell-Webster's sharing of obligations on Dell's prior mortgage and on the current mortgage was a fair equivalent for Dell's conveyance, absent [*4]any affidavits on personal knowledge, plaintiff has not demonstrated that the conveyance was in good faith on the part of either Dell or Dell-Webster. Posner v. S. Paul Posner 1976 Irrevocable Family Trust, 12 AD3d 177, 178-79 (1st Dep't 2004).

IV.CONCLUSION

Consequently, the court denies plaintiff's motion for summary judgment dismissing defendant Rainford's counterclaim for a fraudulent conveyance. C.P.L.R. § 3212(b); DCL § 273-a. Rainford's claim that defendant Dell's conveyance of 1050 Grant Avenue, Bronx County, to its subsequent mortgagors, Dell and defendant Dell-Webster, was fraudulent potentially would void the conveyance and the subsequent lien imposed by the transferees' mortgage and entitle Rainford to a lien on the property superior to any lien plaintiff claims as the subsequent mortgagee. Miller v. Doniger, 28 AD3d 405 (1st Dep't 2006); North Fork Bank v. Schmidt, 265 AD2d at 467.

DATED: October 20, 2008

_____________________________

LUCY BILLINGS, J.S.C.